O woe is me! Despite all attempts at avoiding a referendum in Ireland on the "fiscal compact", the Attorney General has ruled that "on balance" one will be required to amend the Constitution to accomodate the pact...

The Government is to put the revised European Union fiscal compact treaty which tightens controls on member states' budgetary decisions to a referendum, Taoiseach Enda Kenny told the Dáil this afternoon.

The compact, agreed at special EU summit last month, proposes tough new budgetary discipline on each euro zone state, including near-zero public deficits. Twenty-five of the European Union's 27 countries have signed up to the new treaty, with only Britain and the Czech Republic opposed.

Mr Kenny told the House that the Attorney General's advice at this morning's Cabinet meeting was that "on balance", a referendum was required to ratify it. Scheduled Dáil business was interrupted for the statement.

The Taoiseach said that he intended to sign the treaty at the weekend with all the heads of the EU in Brussels. In the coming weeks, he said the Government would finalise the arrangements and the process leading to the referendum, leading to the establishment of a referendum commission. No date was given for the poll.

Mr Kenny has previously denied the compact will condemn the State to further years of austerity.

Tánaiste Eamon Gilmore said the referendum would come down to a vote for economic growth and stability. "We now have an opportunity to go beyond the casino capitalism," he said.

Fianna Fáil leader Micheál Martin criticised the Government for notifying the Opposition eight minutes before the Taoiseach's announcement. "I think it's the right decision and one that shouldn't have required legal advice in my view," he said.

Sinn Féin and a number of left-wing TDs opposed to the treaty had indicated their intention of issuing a court challenge if a referendum was not held.

Sinn Féin leader Gerry Adams said it was another failure by the Government, which had tried to avoid the referendum. "The question is will the Government accept the outcome? Are we going to have the usual re-run replay?" he asked.

Irish voters rejected the Nice referendum in 2001. It was passed following a re-run in October 2002. The Lisbon referendum was rejected in 2008, before being passed a year later after Ireland secured a number of concessions.

The Green Party said it would seek support for a Yes vote on the referendum, with leader Eamon Ryan saying the measures provided for in the fiscal compact was in the national interest.

Support for the European Union has cooled in Ireland following the financial crisis, meaning there is no guarantee a vote will succeed. A rejection could damage Dublin's long-term funding prospects and cast doubt on the country's commitment to the single currency.

In December, Minister for Finance Michael Noonan said a vote on the treaty would effectively be a vote on Ireland's membership of the euro.

Rejecting the treaty would also bar Dublin from accessing the European Stability Mechanism (ESM), the permanent successor to the euro zone's current rescue fund which Ireland is tapping as part of an EU-IMF bailout that runs until the end of 2013.

Last week, Germany's minister for European Affairs Michael Link confirmed that European Union negotiators sought to design the fiscal compact in such a way to avoid a referendum in Ireland.

The Government - and lead opposition party, Fianna Fail - now face the nightmare scenario of a referendum campaign in which they are pledged to support an increasingly unpopular EU and fiscal austerity pact - on pain of losing all EU/IMF/ECB funding and the whole basis of their economic recovery strategy. Sinn Fein, the only opposition party to consistently oppose the Troika strategy has been cleaning up in the opinion polls recently and eclipsing Fianna Fail (25 to 16%) as the major opposition party. This referendum is tailor made for them drive a stake through the heart of Fianna Fail if not the Government. Labour is also particularly vulnerable - down to 10% in the polls. Fine Gael is the only party (other than Sinn Fein) to retain its support. Its largely conservative bourgeois base is quite happy that Austerity policies are hitting the feckless working class most whilst underwriting their relative social position.

For the first time in my life I too, will be forced to consider voting NO in a EU referendum. The pact is economic nonsense, as every reputable economist knows. Worse, it enshrines the IMF/EU/ECB Troika's insistence that we bail-out the bond-holders in Anglo-Irish Bank to the tune of 30 Billion - despite the fact that Anglo never was a strategic bank, and its bond holders were never covered by the truly stupid Government bank guarantee. The original bond-holders have long fled the scene to be replaced by speculative hedge funds who bought the bonds at a discount reflecting their un-guaranteed status. But what really sticks in the craw is that these "Promissory notes" have to be funded at market interest rates and not the preferential ESM funding available for other Government debts. As a result, the €30 Billion Anglo debt could well become €70 Billion by the time all capital and interest has been repaid, or almost 40% of current Irish GDP - all for one worthless, defunct, non-strategic private property speculators bank that most people had barely heard of prior to the crisis!

Recent opinion polls have indicated that only 24% (down 20%) of Irish people trust the EU and only 34% think that Irish interests are taken into account by the EU. 78% still support the Euro, but few will accept Michael Noonan's contention (above) that the referendum is effectively on membership of the Eurozone itself. The poll found 40 per cent of the 1,000 Irish people questioned said they would support the treaty, with 36 per cent against and 24 per cent undecided. However it was taken before the outlines of the fiscal pact were particularly clear or widely understood and thus should be taken as an indicator of general attitudes to EU policies rather than the specifics of the fiscal pact and its implications for Ireland. The key issue is that a NO vote will prevent the Government from accessing ESM funding, without which a default will be all but unavoidable. Many will welcome the prospect of a default - particularly on the Anglo-Irish promissory notes - given there was never a coherent case for the state to take over such ludicrous private debts.

Merkel and the ECB have been playing hardball on the Anglo promissory notes and refusing all (rather timid) attempts by the Irish Government to either negotiate a managed default or to fund the debt at ESM rates. Without some flexibility on this issue, I can't see the referendum passing. However the Fiscal Pact will go into operation even if only 12 countries ratify it, so in theory Merkel could kiss Ireland - as well as the UK and Czech Republic - goodbye. However without access to ESM funds Ireland will be forced to default which will wreck havoc in the Eurozone as a whole.

Once again perhaps only democracy and not a feckless government will stand in the way of a great EU/IMF/ECB clusterfuck that is their stance on the Anglo promissory notes. The Government sought to avoid a referendum because of the unpopularity of austerity policies as a whole. Expect either a defeat for the pact or some last minute deal on the default or funding of the Anglo promissory notes. The next few weeks and months are going to be interesting. Merkozy may have thought the Greek deal would give them some breathing space to allow a Eurozone recovery and improve their own electoral prospects. They had better think again. Pandora's box has just been re-opened. Would it be too much to hope that it might also reopen a Europe wide debate on the need for an employment and economic development strategy to complement the austerity pact?

that this provides a heck of an opportunity for the emergence of a major Eurozone stimulus package. Call it a bribe, if you will; I prefer to call it sanity.

What's the timing of the referendum? April? May? Perhaps the best timing would be hard on the heels of the French presidential election, which could be a turning point for a power shift towards expansionary economic policy.

It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II

All parties are critical of the pacts exclusive focus on austerity and claim - with varying degrees of seriousness - to be in favour of a much more expansionist EU focus on stimulus, infrastructural investment, jobs etc.

The timing is likely to be May although the Government is being coy on that point. I think they will wait to see if they can squeeze some concessions from the EU- particularly on the promissory notes - before calling a date. I suspect the net opinion polls will focus everyone's minds on what is required to secure a positive outcome. We cannot afford another fiasco of voting twice as we did before previous Treaties were approved. Neither can the Eurozone afford a prolonged period of uncertainty this would entail.

It would be considerably cheaper for Merkozy to "buy off the Irish" with a deal on interest rates for the funding required to may off the Promissory notes than it would be to commit a political volte face on stimulus for the EU as a whole. I think they will rely on ECB Long Term Refinancing Operation for stimulus and some PR stuff for the latter. It is difficult to predict whether this will be enough to secure a yes vote in Ireland.

The Irish subsidiaries of foreign banks have made heavy losses borne by their parents but not by the state in terms of the bank guarantee or the state recapitalisation of Irish banks. The main threat to Irish banks is the continued precipitous decline of property prices which is tending toward the "adverse" scenario envisaged in the bank recapitalisation. Irish banks are heavy users of LTRO - that is where the main dependency on the ECB lies. But does that require a YES vote to continue? We will still be in the Eurozone. My suspicion is that the main problem with a NO vote will be the need to get back to market funding of sovereign and anglo debt sooner rather than later - which will lead to a default if market rates are unsustainable.

So it may just be be paper transactions between parents and subsidiaries - possibly balanced by assets elsewhere - and not represent a real debt attributable to "Ireland" absent some other truly stupid state guarantee toward private speculators.

But what really sticks in the craw is that these "Promissory notes" have to be funded at market interest rates and not the preferential ESM funding available for other Government debts. As a result, the 30 Billion Anglo debt could well become 70 Billion by the time all capital and interest has been repaid, or almost 40% of current Irish GDP - all for one worthless, defunct, non-strategic private property speculators bank that most people had barely heard of prior to the crisis!

The other banks were covered by the bank guarantee, where bailed out and recapitalised handsomely (though not sufficiently if property prices continue their collapse - house prices currently -50% peak), and the moneys required to do so transformed into Sovereign debt funded by the Troika. ASAIK the cost of recapitalisng the other banks comes to c. 70 Billion to date - or another 40% GDP. So when you add 25% GDP (Sovereign debt prior to crisis) plus 40% for bank bailouts, plus c. 40% for Anglo - including interest) plus the increase in debt that would have occurred in any case due to the crisis you get the debt/GDP ration rising from 25% in 2008 to a projected peak of c. 125% in 2013/2014.

The above figures are rough approximations, but you the the gist - between bank recapitalisations and the effect the recession would have had on Government finances in any case, the debt/GDP ratio has goen up c. 100% in 5 years.

Migs point above relates to an extraordinarily high level of PRIVATE (mostly financial sector) debt. Effectively the neo-lib "solution" to the crisis has been to transfer excessive private debt into sovereign debt, and then to blame the sovereign for being feckless...

I don't understand your point. External debt is external debt. External debt denominated in Euros has no exchange risk but otherwise is no different from external debt. The other issue is who owes the debt. Household debt has big implications for debt sustainability and impact consumer spending etc. Ireland has one of the highest rates of owner occupation so a lot of this will be mortgage debt - with sustainability largely determined by interest and unemployment rates etc.

But insofar as this is intra corporate debt or financial debt secured against assets abroad, it may not be all that significant in the context of a discussion of the sustainability of Irish sovereign debt and prospects for the Irish economy. The Irish economy is one of the most "open" in the world with a very high degree of integration with the global, EU and US markets. High levels of debt finance may, in that context, simply reflect high levels of financial activity - as in aircraft leasing companies based in Ireland with very high levels of debt on their balance sheets which merely reflects large fleets of planes on their books.

if he hadn't done that, capitalism could have been toppled by the wrath of an enraged, economically disenfranchised populace.

with that and a jubilee, capitalism-as-we-know-it could survive another hundred years, (till we could evolve new levels of communitarian trust and best practice mores).

otherwise it's a race to the bottom with china and their neofascist style of governance, brainwashed from birth to worship authoritarian expediency through disgruntled faux-patriotism, martial mentality, and appeals to sense of family bonding 'organically' with the state.

As more pressure is overtly applied on China, via the brazen "Jasmine Revolution" and increasingly aggressive destabilization efforts around China's borders and throughout the Arab world where it receives the majority of its oil imports, it appears that the regime has weighed the empty promises and paper empire of the globalists against the 1.3 billion people of China who demand pragmatic, not political solutions to their immediate problems. Most certainly, these 1.3 billion people pose a more immediate threat to the survival of the Chinese ruling regime.

Meeting these demands is done via industry, education, technology, and tangible progress. Policies, including the "one child policy" glowingly appraised by US Representative Scheuer, is an invasive, unpopular measure that is unsustainable and only partially addresses concerns like pollution and poverty. It is also a policy the Chinese government is in the process of rolling back.

As the globalists build financial networks of fiat paper, the Chinese are building networks of high-speed rail throughout their nation and beyond their borders. They are building real, tangible infrastructure from neighboring Laos to the continent of Africa. What possible incentive besides the threat of chaos and upheaval can the West offer China and its "String of Pearls" that solves both the immediate problem of self-preservation of regimes and the multitude of problems of the people under these regimes?

The West's ineptitude is not wholly unprecedented in history. Many empires have been buried by this sort of degenerate, runaway greed exhibited by the globalist corporate-financier oligarchies - often times replaced by a more pragmatic, constructive power like China. However, it is not beyond the realm of possibility that a certain "strategy of tension" is at play, where a purposefully oafish and aggressive West drives and unifies the otherwise fiercely independent nations of Asia and the Shanghai Cooperative together, only to be folded into the global government at a later time.

and with russia's putin threatening to make the MIC the main industrial driver of his economy...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

Is there a better explanation for all the parties but Sinn Fein continuing to support austerity and debt repayment than their being packs of careerist politicians dependent on financial sector financing? I know all give lip service to 'honor' and 'being good Europeans' and similar crap, but do they really believe this or are they simply making pragmatic calculations on what will be most likely to keep their party at current or better levels of influence in the country?

Fianna Fáil's Éamon Ó Cuív has resigned as deputy leader and party spokesman on communications, energy and natural resources in a row over the European fiscal compact treaty.

In a statement released this evening, party leader Micheál Martin said his former deputy's refusal to support the parliamentary party's position on the fiscal compact meant it was "no longer feasible for him to occupy these roles".

And they are right. This is a nightmare for Fianna Fail because they will get all the negatives of austerity and none of the benefits of being in Government. Sinn Fein will claim the NO vote (say 40%) will be "theirs", and they will have a point, as they will have been the only major party campaigning for a no.

An increasingly sensitive issue in Ireland is the way in which confidential documents given to the Commission as part of the Troika process end up being given to and leaked by committees of the Bundestag before they are release to the Dail or to the public generally. This has happened twice now and underscore Irelan's loss of sovereignty which might well boost the NO vote in the referendum.

I wrote this diary before I had seen any public reaction to the Referendum decision, but am hearing interesting echoes of my views in the Dail - particularly from Shane Ross, an ex-stockbroker and relatively conservative independent in the Dail.

The leaking of a document on the Irish economy to the Bundestag has been raised with the German finance ministry and the European Commission, Tánaiste Eamon Gilmore has told the Dáil.

"I am unhappy at the way in which the document was handled and the way in which it was leaked," he said, adding that he intends to pursue the issue himself. "I will discuss it with our ambassador in Berlin to ensure the way in which this document was handled is not repeated."

The document from the European Commission said among other measures, the EU-IMF troika had demanded a revised asset sale programme after dismissing the Government's original plan as "not sufficiently ambitious". It also said Ireland would require a "mini-budget" in 2012.

However, Mr Gilmore today insisted such a budget "will not be necessary". He said the document, which has been seen by The Irish Times, will be published later today.

It is the second time sensitive information about the economy has been released to the Bundestag ahead of discussion in Ireland. It follows the disclosure in Germany last November of budget details, including changes to VAT, in advance of their formal announcement by the Government.

Sinn Féin deputy leader Mary Lou McDonald, who raised the issue this morning, said the last time the Bundestag discussed the Irish economy, the Tánaiste told the Dáil he would pursue the matter vigorously. "If there was ever an example of your ineffectiveness and your failure it surely resides in the fact that we now have episode two of exactly the same scenario," she said.

Independent TD Shane Ross said the point about the "embarrassing leaks" was that economic policy and the "policy of austerity was dictated and decided and revealed elsewhere".

Mr Ross said the Taoiseach was in a unique position in Brussels to turn the referendum on the revised fiscal compact treaty into a "positive". He said Taoiseach Enda Kenny should tell other EU leaders the Irish people would respond better to the referendum if there were no more leaks to the Bundestag "and if the Anglo promissory notes come into the equation".

The Dublin South TD called on the Tánaiste to embark on a "diplomatic offensive" to tell the EU that Irish people would look much more benignly on the referendum if it was prepared to "look more benignly on our debt and were prepared to give us a credit write-off".

Mr Gilmore insisted the Government was "not going to trade the constitutional rights of the Irish people with anybody or for anything".

However, Mr Ross noted Minister for Social Protection Joan Burton had told the Financial Times the EU should cut the cost of Ireland's bailout to help it pass the referendum.

In a statement this morning, the European Commission said it is "deeply concerned about the apparent leaking" of the report.

"Commission staff strive to ensure that reports are prepared with the utmost accuracy and that confidentiality is preserved in advance of publication," the commission's representation in Dublin said. "The commission would like to underline once again the good track record of programme implementation established in Ireland so far."

According to the Red C poll, to be published in the Sunday Business Post tomorrow, 44 per cent of the 1,000 people questioned said they would vote in favour of the treaty, with 29 per cent opposed. Just over a quarter of voters say they are undecided.

A poll from January in the same newspaper suggested the treaty would narrowly pass with 40 per cent of those questioned backing it and 36 per cent against. The remainder were undecided.

According to the poll, Fine Gael has maintained public support of 30 per cent. Sinn Féin is the second most popular party, up one point to 18 per cent. Labour is up two points to 16 per cent, Fianna Fáil is down one point to 17 per cent and Independents and others are down two points to 19 per cent.

The comments by the IMF, made by the fund's team leader on Ireland, Craig Beaumont, were the strongest indication yet from a member of the troika that a restructuring of the bonds would happen.

He said easing the promissory note burden would make Ireland's overall debt position more sustainable.

Mr Beaumont gave no indication of when a deal would be reached, but said the first repayment on the notes, due at the end of the month, was not a "hard deadline". The promissory notes, with a face value of just under 31 billion, account for just under one-fifth of total gross public debt (164 billion).

The IMF estimates that the running of large though shrinking budget deficits in the coming years will push public debt to 206 billion by 2015. A deal on the promissory notes could keep public debt significantly below that level.

MORE than a third of voters have adopted a 'wait and see' approach to the fiscal compact referendum, but almost a quarter have indicated that their vote is conditional and that they want Ireland's bailout term renegotiated before they say yes, according to a Sunday Independent/Millward Brown Lansdowne opinion poll.

While the poll has found deep misgivings about the motivation behind the fiscal compact, 37 per cent said they would vote in favour, 26 per cent said they would vote against but 36 per cent said either that they don't know or, more intriguingly, that their support is conditional.

A breakdown of those who have adopted a 'wait and see' approach shows that, unprompted, 21 per said their support "depends" and 15 per cent said they "don't know".

The finding that nearly a quarter of all voters -- a majority of them women -- have indicated that their support is "dependent" chimes with the expressed view of the Minister for Social Protection Joan Burton.

She has come in for some criticism from Cabinet colleagues after she linked the successful passage of the referendum to a restructuring of the repayment schedule on bank debt. In another significant finding, which may be linked to the conditional position being adopted by voters, the poll has also found a comfortable majority of 61 per cent believe the economy will only recover if a deal is agreed to restructure bank debt.

But there is little confidence that the Government will renegotiate a better deal. Only 16 per cent of those questioned said they were "confident" and just 12 per cent were "strongly confident".